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Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cramer's Friends. I'm just trying to make a couple bucks here. My job is not just to entertain, but to put this in context. So call me at 1-800-743-CBC. Tweet me at Jim Cramer. Something seismic happened this earnings season, and the market is still trying to come to terms with it. We've seen an explosion of profits from all sorts of companies that are connected to the data center, the AI revolution, including companies that we typically associate with the so-called real economy. You can't always tell the gains from the sector because, well, by looking at the averages. They don't tell you that. Today was pretty good: Dow gaining 356 points, S&P climbing 1%, NASDAQ jumping 1.03%.
But this is an incredible shift. It's an incredible moment for the data center place and pretty much nothing else. Almost everything else is just kind of blah. Except on days, of course, when Iran blows something up and oil goes higher. Thank heavens that didn't happen today. The stunning gains we're seeing in stocks like AMD after tonight's close, beautiful. Intel, Sandisk, Micron, Coherent, Genova, and many others are driven by a confluence of three themes. And tonight, I want to go through them and then give you the best examples of what's going to go higher with this fire hose of money coming out. So, you better get ready and write them down. First, why is so much money being funneled into anything connected to computing and the data center? I found out why yesterday when talking to Andy Jassy, the CEO of Amazon in Seattle. Sometimes you got to do a little traveling. Data centers are about to give the believers extraordinary returns. I mean, unbelievable returns.
The money's worth it. We just can't tell it yet because right now there are only two publicly traded winners: Amazon and Alphabet. After talking to Andy, I now believe that both Amazon and Alphabet have ensured years and years of colossal profits because they're spending tens of billions now to make hundreds of billions later.
But it's hard to see that because the other publicly traded companies in the data center race, Microsoft, Meta, seem at this point to be, well, losers, or at least their stocks. The only score that I know of course says so. Microsoft appears stuck with old software that has fallen out of favor with the market. And Meta doesn't have a cloud business to help offset the losses from the myriad AI initiatives away from Facebook, Instagram, and WhatsApp. Uh, really smart Ray-Bans, I love them. I love them, don't get me wrong, aren't going to bring the profits a cloud business would for the quizzical Meta. Even as sales from traditional businesses were spectacular this quarter, nobody cared. Second reason: a lot of this data center investment is hidden because it's coming from two companies that aren't public yet: Anthropic and OpenAI. They are growing so fast, no one's ever seen anything like this. And they're so obviously in need of data center equipment that their demand can transform Amazon Web Services or Google Cloud or Microsoft Azure into some of the biggest businesses on Earth. Problem is, Amazon Web Services, Google Cloud, Microsoft Azure are already subsidiaries of literally the largest companies on Earth. If they were independent, their stocks would never quit. That said, Anthropic and OpenAI remain amazing clients. They can't seem to spend enough. And boy, they have it. They have hundreds of billions of dollars. And that reverberates throughout the data center network. Just this very evening, we heard stories about how Anthropic might be buying $200 billion in chips and cloud storage from Alphabet, sending that stock soaring after the bell.
That's precisely what I mean when I say it's architectonic, it's seismic, it's incredible.
Third reason: until this quarter, we didn't realize that there was a coherent narrative developing here. I thought it was going to be the fourth industrial revolution, something that was propagated by Nvidia, which after pioneering this move feels like its stock is being left behind, even after that seems like a preposterous assertion. The narrative, though, is the elevation of artificial intelligence computing and all of its accoutrements as the most important transcendent force in the American economy today. It's now too big and growing too fast to think that it's just a sector. It's an economy within itself.
So you have a well-financed revolution that's already making money for the leaders. It's making money, and now those gains are spreading through almost the entire economy. It's the ripple. I'm going to walk you through the wide range of winners so you know what the heck I'm talking about. You look, we know the whole computer complex needs power, right? That's why you have stocks like Ameren, Electric Power Assemblage. They are with, they're going higher even as interest rates are going up. Normally, that interest rates going higher is a bad thing for utilities. The linkage is broken because the demand for power from the data centers. You have Genova, which spent years under GE as a struggling builder of turbines, suddenly on its own. And what is it doing? It's printing money. It's how you have a natural gas company like EQT roaring because you need that nat gas to burn. Then there's the red-hot Bloom Energy with its non-combustible energy generation. Stock is a rocket ship. You need the chips too. That means Nvidia, of course, which started it all, remains the largest company on Earth. But there's also competitor AMD. Again, fantastic job tonight. Lisa Su will be on tomorrow morning. It's Walk the Street. There's memory and data storage with the now familiar Sandisk. You know, the one that was up 4,000% in a year, as well as Seagate, Western Digital, and Micron for semiconductor manufacturing. What do we have? We had ASML, we had Applied Materials, Lam Research, and KLA. We got chips from Google and Amazon that are first rate. And then there are the new agents that do things that are powered by CPUs from AMD, ARM Holdings, Intel. Hence why the latter stock can't seem to stop at all. These, all these CPUs, they didn't seem to be worth anything. They're gold. None of them saw this new computer economy coming except for Nvidia. So all are short on product. They don't have enough. Everything I just mentioned, there's not enough supply. We don't have enough compute. We don't have enough of the components that would let us make more. It's a gigantic shortage. Then there's the infrastructure. That's all about Dell, which makes the servers, the AI factory, if you will, Vertiv for cooling, Corning for the connecting fiber, as well as Arista, Ciena, Cisco for the networking equipment. There's Lumentum and Coherent for advanced fiber optics. Eaton for the electricity. You need, by the way, that got hit, that was ridiculous. Just go buy that one. I'm not kidding. So, we own it for the trust. They got hit ridiculously. We bought some today. You need backup power. That's Caterpillar and Cummins and Generac. As for the actual builders, CoreWeave, Oracle, they're the ones putting them up, as well as some private equity firms: Brookfield, Blue Owl, Blackstone, among many others. Nucor makes the steel that hooks everything up to whatever source the builder needs. Sterling Infrastructure does a lot of the building too. And the roads, do it reported a tremendous quarter last night. How tremendous? It jumped 276 points or 52% today. How's that versus your index fund? What else? You need to have cloud infrastructure to run the models. Think Google Cloud, Microsoft's Azure, Amazon Web Services. You also got that stuff that Meta and Microsoft are up to. I mean, that Meta is up to, Microsoft is Azure. Finally, sitting on top, there's the interface that started it all: ChatGPT from OpenAI, along with Claude from Anthropic, Gemini from Google, and several others. Here's what you need to know about this compute-led AI economy. It's so much broader than anyone ever seems to believe, especially even just two years ago. Apple uses Gemini for its AI. So that's a gigantic number. They have 160 million people in America that have Apple phones. Maybe they're going to be on Gemini all the time. Almost every retailer is in the cloud, but 80% of the businesses haven't yet gone to the cloud. That's going to change with component costs like memory rising so much. It's too expensive to keep your data at home on premise. The list of what lives in the segment is endless. And it's all part of the fourth industrial revolution, the compute economy that changed the face of a country that was three-quarters consumer and one-quarter industrial and agriculture until now. All right, I'm going to say something bold. I can't see anymore. I wouldn't be surprised if AI is big enough to eventually become a quarter of our huge economy, taking a chunk out of industrial and consumer. No one's thinking like what I just said. No one. Three years from now, it's possible that my one-quarter estimate will look like a lowball number. Other than Jensen Huang from Nvidia, I don't know a soul who saw this thing coming years ago, which is why we have so little equipment built out and there's such a shortage of everything I just mentioned. That's why these stocks are going up by leaps and bounds regardless of the war, the price of oil, the composition of Congress. Here's the bottom line: AI is inexorable. It's fierce, and it's making believers fortunes. Those who don't see it and are stuck in enterprise software or sitting out tech entirely are missing enormous gains. It ain't done. Those with S&P index funds get a small diluted piece of the action. Those who pick the right stocks could get it all because I just gave you the buy list for 2026 and beyond.
Kyle in Pennsylvania. Kyle.
Hey, Mr. Cramer. Go Sixers. Go Sixers. Go birds and go Flyers. My question is about Oracle. Uh, with their stock still down more than 40% from all-time highs, do you see it getting back to their all-time high level?
I think that that last quarter was very good and people were betting against Oracle. I think that's a bummer bet. I think that you should go with Oracle. I wish they'd get rid of Cerner. Just take the darn charge. Let's go to Frank in New York, please. Frank.
Hi, this is Frank Sarinelli from Syracuse, New York. Uh, I got this stock of Celestica years ago when it was like $5 and it's $425. What do you suggest I do?
Celestica. What do I suggest you do? Okay. I want to take, if you have it that long, I want you to take your cost basis out tomorrow and then you're in the enviable position of being able to let the rest run because you're going to be playing with the house's money. And there's nothing like playing with the house's money, which every one of those stocks that I just mentioned, a lot of house money involved there, too. Look, AI is making believers fortunes. It just is. And we could all deny it or say it can't last or that people have been to casino attached to whatever. I don't care. This is a game of skill, not of chance. And I just gave you the buy list, which is of skill, not of chance, for 2026. Anybody tonight, Rockwell Automation, another winner of the data center, soaring after earnings, one of the best performers of the day. I'm getting more color on the quarter straight from the CEO. And how are the casino stocks holding up amid all this global turmoil? I'm checking in on a smaller guy, see whether the stock can spread its wings and fly. And life science device company Waters just reported a quarter proving Wall Street's got this wrong. Biggest gainer in the S&P today. I'm going to get the latest with the company's top brass. I want you to stay with the data center and stay rec.
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All right, how about this incredible run in Rockwell Automation, the company that dominates the US market for what are called programmable logic controllers. Basically, industrial computers that are the brains of manufacturing operations. This morning, Rockwell Automation reported a terrific quarter. Their e-commerce and warehouse automation sales were up roughly 30%. Their data center business more than doubled. Stock then jumped nearly 9% today. Of course, in response to that, it's now up more than 71% over the past 12 months. So, can it keep running? Let's check in with Blake Morett. He's the chairman and CEO of Rockwell Automation to find out. Morett, welcome back to Mad Money.
Jim, it's good to be here.
I'll tell you something, Blake. And I looked at this mosaic of what you've done. It's kind of what we hoped America would be doing when we spoke at the beginning, which was it looks like a combination of reassuring the return of compute, the idea that we can make things here. This all came together this quarter.
It did. We had a great result. You know, our offering across a broad swath of American manufacturing, but really around the world, to demonstrate the impact of the technology with an engaged workforce. And as you said, it was e-commerce, warehouse automation, data center, semiconductor, energy markets. We had, you know, good growth in automotive, life sciences, and consumer packaged goods. So, it really was broad-based in the quarter.
So, but we saw you at your convention last time and you said that people seemed to be very interested. Did it turn into some serious orders and are those orders being done right now?
We're seeing double-digit growth in orders to increase capacity in the US. We're definitely seeing the optimism around the focus on American manufacturing. We're thrilled to see more people recognizing the role that manufacturing plays at the real core of the economy.
Now, do you think the one big beautiful bill helped with accelerated depreciation?
Well, I think the bill and tax certainty, having a stable statutory rate, some of the benefits like bonus depreciation, particularly for small and medium-sized manufacturers, I think those do help.
You know, I think a lot of people on Wall Street did not think that those things matter because they don't work in real companies. That changed the mind of a lot of people in terms of expanding, didn't it?
You know, it's as I said, it's the combination of an engaged workforce with the technology, and that technology certainly includes artificial intelligence, but it's also the traditional sources of value in factories. As you said, the programmable controllers, the power control, all of those things matter. They matter in data centers. They matter when you're assembling vehicles. They matter when you're moving energy.
How is it possible that software and control could have 17% organic? I did not think that was possible.
So, you know, at the heart of that business is the Logix programmable controllers, and we saw a growth of over 20% in that business. It's in traditional industries for us like food and beverage and automotive assembly, but it's also in new areas like data center as people are using those controls to manage the environments in these data centers.
A lot of people have been, I guess, taken by surprise at all the construction in data centers and demand for memory. And I wanted to know whether you find that people were like, 'Holy cow, I got to put some money in this because it's a great opportunity.' Or is it meeting, are those people meeting the demand of customers because it's extraordinary? We were at Amazon, extraordinarily powerful wave of demand.
It is. And our participation in data center construction is in a few areas. So the power distribution is something that we participate in. As I mentioned, the building management, being able to control the temperature, the cleanliness of the air, the safety systems, we're seeing some of that demand indirectly through that HVAC supplier. So when you put a new chiller in, it typically is going to have a lot of our equipment as well.
Yeah. I think people don't understand that just because it has a name of a vendor, there's a lot of companies that are involved. It's not just Vertiv the whole way. Now, e-commerce warehouse automation, is that when a company just gets all the boxes and they're trying to figure out how to do it and they don't want humans to do it because it's a dull, dirty, dangerous job?
Well, there's different aspects to that vertical and market for us. So, there is some of our data center participation that's reflected in our great growth in e-commerce and warehouse automation. There's also the parcel handling companies. There's e-commerce and the fulfillment centers. And then there's the whole business that we've called production logistics of being able to bring material to the line in a consumer products company and take the finished goods away either to the loading dock or the warehouse. So there's different facets of that business and all of those areas are investing heavily.
Well, I want to congratulate you. There are a lot of companies that were in your business say 15, 20 years ago and they gave up because they thought it'll never happen. There'll never be a renaissance. How did you know that to stay in, stick to your knitting and not go do some crazy thing that wouldn't make any money for shareholders?
Well, you know, we focus on the production space. I've been in that business my entire career. We have a lot of people in the company who only know this business. And by adding the new technologies, artificial intelligence at the head of the line to the traditional sources of value and the domain expertise that we have loads of, we found that we've been able to provide significant value to these customers who recognize that if they're going to make it in America, they need to combine that technology with an engaged workforce. And so we're in a great spot. You know, there's not another company that has as much technology in American manufacturing as Rockwell.
And I got to tell you, I think we're like in the second or third inning and no more than that. Blake Morett, chairman and CEO of Rockwell Automation. They know how to do this. Blake, thanks for coming on the show.
Mad Money Spectator, about one of the few casino stocks that has been beating the house this year. Cramer's breaking down why Monarch Casino has been an ace next.
Last Wednesday, I got a call from Todd in California, who stumped me by asking about Monarch Casino and Resort, which is a $2 billion company with just two locations, one in Reno, Nevada, and another one outside of Denver. I told him I'd circle back after doing some homework because I didn't know this one, and you viewers deserve a considered deep dive. Turns out in the past 12 months, Monarch Casino and Resorts has rallied nearly 50%, trouncing both the S&P 500 and its larger rivals in the casino space. In fact, the stock's up almost 25% year to date. Even as skyrocketing gasoline prices have put immense pressure on the likes of Las Vegas Sands and Wynn Resorts. It got me wondering why this stock seems to be running circles around the larger operators. So, let's talk Monarch. These guys started as the Atlantis Casino Resort Spa in Reno, one of the nicer places to stay in Nevada's second-best town for gambling. Over a decade ago, they bought their second property in Black Hawk, Colorado, the Monarch Black Hawk, which is about 40 miles west of Denver. Together, these two properties have combined to make a pretty nice business for Monarch, a stock that keeps hitting new all-time highs. And look, this thing deserves its incredible rally. Monarch reported a terrific quarter a little over two weeks ago. Monarch's got a clean balance sheet with basically zero long-term debt, regular capital investment at both properties, take market share from their competitors, and steady cash return for shareholders. In the first quarter, the company spent nearly $18 million on buybacks, a little less than 1% of the current market cap. That's on top of $72 million worth of buybacks last year. Now, look, it may not sound that much. It's a $2 billion company. How about the stock itself? Well, Monarch now, it sells for roughly 18 times this year's earnings estimates. And given its growth rate, I think that's a fair price. This is clearly a good one. Although, I'm wary of getting too bullish on a consumer discretionary name right now with the price of gasoline going ever higher. Still, we need to understand the story and how come Monarch keeps outperforming the heavy hitters in the space. Most of these stocks have been hammered since the war with Iran started. Okay, because oil spiked, people are very worried about the state of consumer. Now you know that I think the real problem with the big international casinos, though, is not the state of consumer here. It's the state of consumer overseas. For example, the largest casino company, Las Vegas Sands, is now exclusively a non-US company. It's got properties in Macau and Singapore, nowhere else. And the Iran-induced oil and gas shock is hitting East Asia much harder than it is us. Wynn Resorts still gets the majority of its earnings from America, but nearly half of the business comes from Macau, which is their number one growth property. They're also building a casino in the UAE near Dubai, and we know that's a problematic place for a tourist destination. In retrospect, it is also an ill-advised choice because, well, we all know what happened. Compared to those two, MGM Resorts has been a much better performer, up almost 4% year-to-date, in large part because it gets 55% of its business from Vegas, another 22% from regional casinos spread across the country. Only 23% of the business comes from Macau. Say what you will about America. We got our own natural gas supply, which is why our economy is more or less insulated from the economic collateral damage of the world. Though there's no denying higher gasoline prices hurt. At the same time, if you own a small regional casino company like Monarch with just two locations to focus on, it's a much easier story to follow. And unlike Wynn, you don't have to worry about things like corruption crackdowns or property value crises in China or war in the Middle East delaying your casino near Dubai. So, here's the bottom line. Todd in California brought us a good one with Monarch Casino and Resort. It's a nice clean story in the regional casino space, and you could do far worse than owning a focused operator that's steadily growing its market share and putting up consistent growth. That said, the stock's already had a big move. So, if you want a piece of it, here's what I recommend: wait for a pullback before you pull the trigger. If the world calms down a bit and China and the Middle East go back to being attractive again, then the big international casino plays might go back to being better investments. For now, though, it's just much easier to own a stock like Monarch than it is to bet on those other major players, isn't it? Let's go to Will in Colorado. Will.
Jim, good speaking with you again, man. Club member. Loving it.
Oh, thank you, Will. Thank you for being a club member. What's up?
I appreciate it. Well, with all the competition and streaming, you know, like Disney, is Netflix a buy, buy, buy?
Well, okay. It's not a buy, buy, buy because we're still, it's a critical moment for Netflix because they went and they did that ill-fated attempt to be able to get Warner, well, Warner Brothers Discovery. And because of that, people feel that they must need that property. We have to wait one more quarter and then I think people realize, no, they just did it. It would have been a good idea. Let's move on. Let's go to Rory in Connecticut. Rory.
Booyah. Rory, what's going on?
Lori, I'm sorry. I'm sorry.
By Lori C from Disney. Nice. Hey, nice quarter. Okay, go ahead.
Thanks for taking my call and all your hard work. This stock's year-to-date return is negative 21%. Due to the Middle East conflict, do you think Booking Holdings is a buy at this time?
Uh, I don't think this war, I know this war is supposed to be a short war. I mean, short war so far. I, you know, I don't know how you can really gauge a short war because, like, war is inherently ungageable, engageable, engage, ungageable. So, no, Booking. I think Booking and the casinos, I mean, Booking and the hotels and certainly the cruise ships, we're just not going to stick our necks up very, it's just not worth it, not when we got the data center theme. Look, I think this Monarch's a nice clean domestic story, but I'd still wait for a pullback. It's much easier to, it's much easier to own it compared to some of the big casino players because they have so much international. And that's what, Lori, when she talks about Booking Holdings, he's no thank you now. Much more ahead, including my exclusive with today's best S&P performer, Waters Corp. Then I'm here to educate and teach. That's why tonight I'm checking in with someone who's been essential to helping young people manage their money on social media for ages. Don't miss my sit-down with Mrs. Dow Jones herself, Haley Sachs, and all your calls rapid fire in tonight's edition of the Lightning Round. So stay with Cramer.
Can you believe these incredible numbers from Waters Corporation? This, the arms dealer to the life science industry, recently acquired Becton Dickinson's biosciences and diagnostic business, a deal that Wall Street initially greeted with immense skepticism, candidly, except for me. But now we got the first quarter from the company and the numbers were just excellent. That's why the stock shot up 13.5% today, making it the best performer in the S&P 500. So let's dig in with Dr. Udit Batra. He's the president and CEO of Waters Corp to learn more. Dr. Batra, congratulations on the quarter. Welcome back to Mad Money.
Jim, thanks for having us. Wonderful to be with you.
Now, I've got to tell you, when the deal was announced, your stock got hit and I recognized how good these properties were, but I had no idea that you could get this much out of them. Why don't you tell people about what you were looking for and what you got because it really says to the naysayers, you don't know what you're doing with this company.
Jim, again, thank you for having us. Look, we are, Waters is a downstream, high-volume, regulated player. I mean, think quality control of medicines. The last time we spoke, we spoke at length about it, right? So purity of medicines. We basically developed instruments, software, reagents to ensure the safety of these medicines and more now, more and more complex biologics. We've taken leading brands in these segments and introduced game-changing products and that has led to the growth and margin expansion that you've seen. With Becton Dickinson's businesses, we saw exactly the same type of end markets with regulated, high-volume settings. Think microbiology, right? So every year, 1.7 million people get sepsis in the US alone. Roughly 300,000 of these people die and the BD brands are a leading player in the microbiology business. So it looks exactly like the Waters business, feels exactly the same and tremendous synergies on the biologics testing and reagent side. So very excited about it and very happy with the progress you've made so far.
Well, I also should put, obviously, old Waters did amazingly well and you are doing well in, I want to just bring this out, high-volume life science applications. There are a half dozen companies that I watch in this industry. Do you know that almost every one of them is missing their numbers? Missing their numbers, missing their numbers. And by the way, acting as if it's not their fault. You obviously were not willing to take that. That's never been your approach to say, 'Ah, what could I do?' That's not you at all.
So, Jim, look, it again goes down to the choices we've made, right? We're downstream. We're in these regulated applications. Our software is used to submit data for 80% of innovative pharmaceuticals to regulators around the globe. So we enjoy this privileged place in the pharma industry. Our pharma end market this quarter grew 14%, right? And this was broad-based growth, growth in the US and Europe led by the large pharma industry who are replacing their old instruments with our innovative products. India grew in the mid-teens with the generics basically driving that growth and China grew over 50% in the pharmaceutical segment. So, we're very happy with what we're seeing on the base business and I'm incredibly proud of my colleagues who work day and night to make this happen. I just get to represent them.
All right. Now, you tell them I feel that way because boy am I ever sick of the people who keep doing these alibis. Analytical sciences division, fabulous growth, lots of good nameplates there. You say 14% pharma growth driven by instrument replacement cycle, new product innovations, bioprocessing, idiosyncratic growth drivers with ramping GLP-1 manufacturing volume. So you're talking about some marquee clients there.
Yes. I mean, we are the largest supplier of separation columns. I mean, here's one of them. These basically are used to separate out different types of molecules, different types of peptides. For both of the large GLP-1 manufacturers, our columns are used in quality control. So as the volume goes up for injectables, for orals, for as these things get genericized, they use these columns and that drives the growth of our GLP-1 segment of the business. We're also a leader in food safety testing, assuring the safety of the food that we eat, the water that we drink, right? So we are in again these high-volume settings with innovative products. And when you stay with pharma, I mean, look, they're spending again to expand in the US as well, right? The reshoring of a lot of the pharma manufacturing facilities will also be a tailwind to our business because when you manufacture, you use more columns, you use more instruments.
Now, do you think that there's a time, and I'm looking at the advanced diagnostics division, where we just have to say, you know what, China, we can't be all in China, it's not going to come back, or is it just worth it to hang in?
Uh, I think, look, Jim, like every market, innovation is rewarded. So, again, let's stay with pharma for a minute. The generic segment of pharma in China has been declining for many years due to price restrictions, right? This has been happening for a while. But the innovative sector, they basically are the leading biotech industry right now globally. Roughly one-third of the molecules that are in-licensed by large pharma today come from China. This then leads to the growth of the contract manufacturers and they're trying to build their own version of a Pfizer or an AstraZeneca or a Roche and they're doing the end-to-end drug discovery and development and that's why that business grew 50%. So you have to find pockets of innovation, pockets of growth. And the same thing we see in the microbiology segment, same thing we see in our diagnostic segment. Yes, there are pieces that are under pressure, but innovation is rewarded no matter where you are. And China is no different.
All right, fair enough. Well, you've got the optimistic attitude that I like so much. That's Udit. He's the president and CEO of Waters Corporation. Best performing stock in the S&P today. Deserving. Thank you, sir.
Everybody's back after the break.
